Fee splitting is when revenue is shared between physician and physician, or between a physician and a third party, based upon referral sources.

For example: Physician A refers a patient to Physician B. Physician B makes a hundred dollars from that referral. As a thank you, he wants to give a percentage to Physician A for that referral.

This practice is forbidden and can cause an issue with that physician’s license to practice. A physician is not allowed to profit off of the treatment being rendered to a patient by another physician. A physician can only earn money for direct treatment he or she renders, not from treatment rendered by someone else due to a referral.

Here is another example: You are hired as either a full-time, part-time or even an independent contractor for a practice and are rendering medical/dental treatment. A question arises on whether it is considered fee splitting if you are paid a percentage of the revenue generated. If the practice pays you a percentage of the revenue that is directly related to the treatment that you provided, then there is no problem. In other words, you are earning money based upon treatment you have physically provided.

Now let’s say you are not associated with the practice at all and just a referral source, or, you are associated with the practice and they would like to pay you a percentage of all the revenue generated, whether you provided the treatment directly or not. Is this considered fee splitting? The answer is yes, since you did not provide the treatment directly and/or you referred the patient to the practice for treatment.

What happens if a practitioner decides to use a Management Service Organization (MSO) to manage the business operation of their practice? How does the MSO get paid?

As you may be aware, MSOs perform all of the back-end office management of the practices. They can do any of the following:

The billing;

The marketing and advertising on behalf of the practice;

The payroll;

The payment of rent; or

The payment of any equipment, supplies or office materials required.

In short, they perform the management aspect of the practice. Generally, the MSOs are paid a flat fee for the services that they are performing. Any other fee structure will need to be looked at very carefully, as it may be considered fee splitting, and thus not allowed. As MSOs are being increasingly more popular, there will be a separate article in the near future about their structure and use in the healthcare industry.

Overall, many practitioners may not have a full understanding of fee splitting and the consequences that follow. As it can be damaging and potentially detrimental to their future in practicing, it is very important that not only is it understood, but also adhered to by the practitioners.